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TMI Blog2016 (12) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... eated short term capital gains of Rs. 45,37,169/- as business income on the plea of frequency and volume of transactions being entered by assessee. 5. In his order, the AO also observed that assessee had borrowed funds for investment in shares. AO held that assessee was involved in business of share trading on the plea of holding period of shares. Our attention was drawn to the fact that not a single transaction out of the number of transactions mentioned by the learned AO is other than delivery based. This confirms the fact that the assessee was not intending to make any trading profit with the shares held as investments. There was not even one such transaction that shows the trading business bent of mind of assessee. As per learned A.R, merely because as a prudent investor, the assessee was seeking to minimize her loss on investment gains arising on its sales cannot be taxed as business profits. The only loan taken was Rs. 5 lacs during the year and that too for immovable property. Our attention was also invited to the frequency and volume of the transaction to indicate that it was not sufficient for the AO to merely rely on the same and change the conclusion already drawn in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee has also earned substantial income from long term capital gain and also dividend income. All these facts prove beyond doubt that the intention of the assessee has always been to invest the money in shares and not the trading in shares. High frequency of the transactions cannot be the sole factor in holding the assessee as a trader. Even there is no minimum holding period of shares is prescribed under the statute for treatment of the same as short term capital gain. Keeping in view the overall facts and circumstances of the case and in view of the principle of consistency, in our view, the assessee has to be treated as an investor and the M/s. Siddhalchal Enterprises Pvt. Ltd. income earned from purchase and sale of shares is to be treated as short term capital gain. Thus, this issue is decided in favour of the assessee. 8. Learned AR invited our attention to the decision of Delhi Bench of Tribunal relied on by CIT(A) in case of Radials International, and placed on record the order of Hon‟ble Delhi High Court dated 25/04/2014, wherein decision of ITAT was reversed and Hon‟ble High Court held that profit arising on sale of shares were to be taxed as income from ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure of gains so earned by the assessee is to find out whether the assessee had acquired the shares with an intention to earn dividend by holding the shares as investor or to earn profit by trading in the same. It is also true that volume and frequency of transactions is an important indicator of the intention of the assessee, whether to deal in the shares as businessman or to hold the shares as an investor, but certainly not the sole criteria. The intention of the assessee while purchasing the share, is the important and guiding factor as to whether the same was purchased with an intention of investment or for trading. The facts of the instant case clearly reveal that the assessee was consistently investing in shares as investor. Even after accepting assessee claim of short term capital gains u/s.143(3) r.w.s.153A in the immediate assessment year i.e., A.Y.2005-06, the AO has not pointed out as to in what manner the activity of the assessee for the year under consideration had been changed from investor to that of a trader especially when in respect of very same shares which were held for more than 12 months, the AO has accepted the profit arising therefrom as long term capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer is not permissible as this would render income tax provisions of short term capital gains redundant. 15. Reliance can placed on the following judicial pronouncements :- i) In the case of Bharat Kuverji Kenia Vs. Add.CIT, 130 TTJ 86 (Mum), the Mumbai Bench of the Tribunal observed that, "There is no justification for treating the activity of purchase and sale of shares as 'business' merely on the reason of the' volume of transactions. As per well settled principles of law, the frequency of transactions cannot be per se decisive." ii) In the case of Mr. Nehal V. Shah vs, ACIT (ITA. No.2733/Mum/2009), the Mumbai Bench of the Tribunal held "that a single transaction would be split by the computers trading of the stock exchanges into many smaller transactions, but, that does not mean that assessee has carried so many transactions". In the case of Hitesh Satishchandra Doshi vs. J'Cl'I' (ITA No. 64971Mum/2009), the Tribunal held that the frequency of purchase and sale of shares, transactions through the electronic system of Stock Exchange split a single order into numerous transactions. This gives an unrealistic figure of the number of transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been relied by CIT (A) on page nos. 19, para no. 38 of his order on proposition that each year's assessment is final for that year does not govern later year and principle of res judicata is not applicable to income tax proceedings. 18. We found that the CIT (A) has selectively cherry picked few lines from decision. In fact, the SC held that principle of res judicata should be observed unless there are compelling reasons to divert. The Apex Court held as under :- "We are aware of the fact that strictly speaking res judicata does not apply to income tax proceedings. Again, each assessment year being a unit, what has to be decided in one year may not apply in the following year but where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed .in a subsequent year." 19. We also found that even in the assessment year 2012-13, scrutiny assessment was framed u/s.143(3) vide order dated 04/03/2015, wherein assessee‟s claim of short term capital loss was accept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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